WT/TPR/S/210 Trade Policy Review 
Page 14 
 
 
II. TRADE AND INVESTMENT REGIME 
(1) OVERVIEW  
1. The stated strategy of Guatemalan trade po licy forms part of a more general economic 
development agenda aimed at c onsolidating market mechanisms and providing incentives to improve 
competitiveness.  Guatemala attaches equal importan ce to the multilateral system and to regional and 
bilateral integration procedures, with a view to improving access conditions for its exports and 
promoting greater legal certainty and economic stability. 
2. Guatemala became a member of the WTO on 1 July 1995 and has been participating actively 
in the Doha Development Round.  It has submitte d a large number of notifications to the WTO, 
although as of August 2008 a few were delayed, e.g. regarding domestic support for agriculture, 
customs valuation and technical barriers to trad e.  Guatemala has been  a complainant in the 
WTO dispute settlement mechanism in two cases dur ing 2002-2008, and it has reserved third-party 
rights in six other cases.  It has not acted as defendant during this period. 
3. Guatemala's trade policy is formulated in the context of its participation in the 
Central American Common Market (CACM) – an inte gration process that has been gathering pace in 
recent years.  The Free Trade Agreement between the Dominican Republic, Central America and the 
United States (DR-CAFTA), which has been in for ce in Guatemala since July 2006, is specially 
relevant given the changes it has entailed for th e country's trade regime, and the fact that 
three quarters of Guatemala's merchandise trade is with  the parties to this agr eement.  Guatemala also 
has free-trade agreements (FTAs) in force with th e Dominican Republic, Mexico, and Chinese Taipei;  
and it has concluded FTAs that had not yet entered in to force as of October 2008, with Panama (in 
conjunction with the rest of Central America);  with Colombia (together with El Salvador and 
Honduras);  and  with Chile (along with the rest of Central America).  Guatemal a also has preferential 
agreements in force with Cuba and Venezuela;  and, as a member of the CACM, it is currently 
negotiating an association agreement with the European Union and FTAs with CARICOM and 
Canada. 
4. Guatemala's foreign investment regime allows fore ign nationals to invest in the vast majority 
of economic sectors, and it grants national treatment  to foreign investors.  The exceptions include 
sectors that impose laws governing specific areas, namely insurance and a number of regulated 
professional services.  Guatemala has signed various reciprocal investment promotion and protection agreements. 
(2) T
RADE POLICY AND INVESTMENT FRAMEWORK  
(i) General legal and institutional framework 
5. Guatemala is a unitary republic.  Its territory is divided into 22 departments, which are 
subdivided into 333 municipalities.  The Decentralization Law, Decree No. 14-2002, has steadily been transferring decision-making power from the Govern ment to the municipalities, in respect of 
administrative, economic, social and political jurisd ictions, and funding to implement national public 
policies.  Priority areas for decentralization are agriculture, communications, infrastructure, housing 
and the economy.  While several responsibiliti es and resources in relation to Government 
procurement have been decentralized from the Gove rnment to the municipalities, all taxation issues 
remain the exclusive preserve of Congress. Guatemala WT/TPR/S/210 
 Page 15 
 
 
6. The Political Constitution of the Republic of Gu atemala was adopted in 1985 and amended by 
Legislative Agreement No. 18-93 of 17 November 1993.1  The Constitution establishes separation of 
powers between the executive, legislature and judiciary;  defines the main individual guarantees and the functional organization of each State agency ;  and specifies the separation of powers and 
functional autonomy in each case. 
7. The President of the Republic, who is elected  by universal suffrage for a non-renewable 
four-year term, exercises executive power and is res ponsible for concluding an d ratifying international 
treaties.  The Political Constitution of the Republic of Guatemala requires the President of the Republic to submit all international treaties and conventions, public utility contracts and concessions, 
for consideration by the legislature before ratifica tion.  Nonetheless, in practice this requirement is 
restricted to agreements which:  (i) affect current laws;  (ii) affect national sovereignty, or establish 
full or partial Central American economic or political union;  (iii) transfer competencies to agencies or 
institutions to pursue regional objectives in the Cent ral American framework;  (iv) commit the State 
financially;  (v) represent a commitment by the State to submit to international arbitration;  and 
(vi) contain a general clause on arbitration or submission to international jurisdiction. 
8. Any agreement that is not covered by the af orementioned categories can be ratified by the 
President without the need for congressional approva l.  Congress cannot directly request amendments 
to specific aspects of an agreement;  any alterati ons must pass through the procedure used for the 
agreement's approval;  i.e. the President of the Re public must request amendments and, once these 
have been negotiated, submit the corresponding reform initiative to the Congress of the Republic, 
which will either approve and implement it or reject it. 
9. The President of the Republic has exclusive power  to appoint and dismiss Ministers of State;  
and he or she chairs the Council of Ministers, co nsisting of the President, the Vice President and 
Ministers of State.  The most recent presidentia l election was held in two rounds of voting on 
9 September and 4 November 2007;  the next is scheduled for 2011. 
10. Legislative power is vested in the single-chamber Congress of the Republic, comprising 
158 deputies elected for a four-year term, under a syst em based partially on representation of electoral 
districts and partially on proportional representation usi ng a national list.  Deputies can be re-elected.  
The most recent election was held on 9 Sept ember 2007.  Congress has the exclusive right, inter alia , 
to enact, reform and repeal laws ;  approve or modify the public  budget;  and approve before their 
ratification, all international treaties that, am ong other things, could in volve submitting issues to 
international arbitration or affect existing laws for which the Constitution re quires the same majority 
vote.  Congress also has the exclusive right to establish national taxes (local taxes are set by 
municipalities) and to modify the State budget.   Through Decree 123-84 of 28 December 1984, 
Congress delegated the right to alter tariffs to the Council of Ministers Responsible for 
Economic Integration. 
11. Following approval by the legislature, the proce dure for ratifying an international agreement 
involves the enactment by Congress of a decree forma lly approving the agreement, and a ratification 
instrument issued by the Ministry of Foreign Affair s on behalf of the Executive, to be signed by the 
President.  Both the decree and the ratification inst rument must be published in the Official Journal 
for the agreement to come into force. 
12. Judicial power is vested exclusively in the judiciary and distributed among various bodies.  
The Judiciary Law ( Ley del Organismo Judicial ) establishes a single jurisdiction to be exercised by 
                                                     
 
1 The text of the Constitution can be viewed at:  http://www.mspas.gob.gt/menu/marco_legal/ 
constitution_guatemala.pdf. WT/TPR/S/210 Trade Policy Review 
Page 16 
 
 
the following:  the Supreme Court of Justice and its various chambers; the Court of Appeals, the 
Magistrates Courts, the Tribunal for Administrative Disputes, the Public Accounts Court of Second 
Instance;  the Military Tribunals, the Court of First Instance, the Juvenile Courts and the Justices of 
the Peace.  The Supreme Court consists of 13 j udges appointed by Congress for renewable five-year 
terms.  A separate permanent Constitutional Court, which is an independent tribunal with exclusive 
jurisdiction, is charged with upholding the constitutio nal order by ruling on whether laws of any kind, 
including international treaties, and acts subject to public law are constitutional. 
13. Guatemala has significantly improved governance since the last Review in 2002, although 
challenges remain.  A recent study shows that, while the peace accords have brought favourable 
changes to the country, particularly in relation to the strengthening of democracy and civil liberties, 
several improvements are still needed, such as st rengthening the public sector and Government 
institutions.2 
(ii) Trade policy objectives, formulation and implementation 
14. The Guatemalan economic and political system has undergone far-reaching reforms since the 
signing of the Peace Agreements in 1996, and sever al laws have been passed to create a more 
favourable climate for investment and transparency , as discussed in Guatemala's previous Review.  
During the period under review, a number of measures have been introduced to make the most of these reforms both domestically and externally.  In addition to greater devolu tion of powers from the 
Central Government to the municipalities, Guatemal a has also actively promoted the implementation 
of economic reforms by negotiating bilateral, regi onal, plurilateral and mu ltilateral agreements, and 
has also introduced domestic reforms in areas su ch as financial services (Chapter IV(5)(iii)).  
International initiatives have recently targeted deeper integration with its Central American partners, 
and the negotiation of the FTA between Central America, the Dominican Republic and the United 
States (DR-CAFTA).  Guatemala h as reaffirmed its commitment to the multilateral trading system 
during WTO ministerial meetings.
3 
15. Guatemala is a relatively open and highly expo rt-oriented economy.  The national authorities 
have stated that it therefore gives equal importan ce to the multilateral system and to regional and 
bilateral integration processes, with a view to  improving access conditions for its products and 
services, and to promote greater legal certainty and economic stability.  The authorities have further stated that the 2004-2006 National Negotiation Age nda sets trade policy priorities in relation to 
WTO negotiations and Central Amer ican integration in the CACM framework.  While the authorities 
do not envisage any conflict between these prio rities, they acknowledge that multilateral 
commitments would take priority if one should arise.  They have also pointed out that Guatemalan trade policy has always been aimed towards fulfilling its commitments. 
16. Guatemalan trade policy forms part of an ec onomic development programme aimed at fully 
consolidating market mechanisms and giving in centives to competitiveness.  Economic and trade 
reforms are included in the implementation of a Na tional Action Plan (PAN).  The first PAN, which 
was in implemented from 2003 onwards, attempted to identify the country's trade capacity.  The 
National Action Plan:  Strategy for Strengthening an d Creating Trade Capacities (2007) is a version of 
the 2003 PAN, updated by an ad hoc group involving the public and private sectors, with technical 
assistance from the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).  The changes proposed in the new plan reflect the adjustments that Guatemala needs to 
make following approval and implem entation of DR-CAFTA.  The main objective of the PAN is to 
                                                     
 
2 Porras Castejón, Gustavo (2008). 
3 WTO documents WT/MIN(03)/ST/84 and WT/MIN(05)/ST/68 of 12 September 2003 and 
15 December 2005, respectively. Guatemala WT/TPR/S/210 
 Page 17 
 
 
identify and establish trade priorities, with a view to creating and strengthening the trade capacities of 
institutions that implement and use DR-CAFTA.  This  plan is complemented with the Social Action 
and Economic Revival Plan, and th e National Competitiveness Programme. 
17. The Social Action and Economic Revival Plan, better known as " ¡Vamos Guatemala! " is 
based on five lines of action aimed at strengthening competitiveness, supporting agriculture, making 
sure that social and economic development policies are mutually complementary, promoting investments and creating a favourable investment clim ate that respects the environment.  In addition, 
the National Competitiveness Programme (PRONACOM)  seeks to promote interagency alliances to 
achieve the objectives set in the National Co mpetitiveness Agenda.  The responsibilities of 
PRONACOM are to promote investment, support the formation of  productive clusters, and support 
local development programmes. 
18. A key objective of the Government's trade expansi on strategy is to ensure that the benefits of 
new trade opportunities are accessible to small and medium-sized enterprises (SMEs), both directly 
through access to export markets and indirectly by developing strategic links  both abroad and with 
local export enterprises. 
19. The Ministry of the Economy is the lead agency in trade policy formulation and 
implementation, in coordination w ith other government agencies.  The Ministry handles all foreign 
trade matters, negotiates trade agreements and mon itors their implementation.  It also represents 
Guatemala in the WTO and has responsibility for rela ted negotiations.  Within the Ministry of the 
Economy, the Directorate for the Administration of Foreign Trade (DACE) in the Vice-Ministry for 
Integration and Foreign Trade, administers the inte rnational economic-trade instruments that are in 
force for Guatemala.  The authorities have stated th at the Ministry's aim is to be able to provide 
specialized assistance to the country's trade community on foreign trade issues and protect the 
legitimate interests of national pr oduction, facilitating access to intern ational markets for its products 
by exploiting the trade agreements to which Guatemala is a party. 
20. Other ministries that participate in the fo rmulation and implementation of trade policy 
include:  the Ministry of Foreign Affairs, the Mi nistry of Agriculture, Livestock and Food (MAGA), 
the Customs Directorate, which is part of the Tax Administration Supervisory Authority (SAT), and the Ministry of Public Finance, among others. 
21. The private sector participates in trade polic y formulation through ad hoc groups, and it is 
also represented on the National Council for E xport Promotion (CONAPEX) and the National Export 
Coordination Commission (CONACOEX).  The private sector coordinates its own positions and 
assesses the negotiations in which Guatemala pa rticipates through the Business Commission for 
International Trade Negotiations (CENCIT), whic h encompasses firms engaged in the goods and 
services sectors. 
(3) F
OREIGN INVESTMENT REGIME  
22. The Constitution establishes that the fundamental obligations of the State include protecting 
capital formation, saving and investment, and creatin g adequate conditions to promote the investment 
of national and foreign capital.  The Foreign Invest ment Law, Decree No. 9-98, regulates this type of 
investment in Guatemala and prohi bits all forms of discriminati on against foreign investors or 
investments.  Foreign investors may engage in an y lawful economic activity in the country, and hold 
unlimited shareholdings in profit-making compan ies organized in accordance with Guatemalan 
legislation.  The Constitution specifies certain exclusi ons to protect the general interest.  According to 
Article 120, the State may, in situations of force majeure  and as long as is strictly necessary, intervene WT/TPR/S/210 Trade Policy Review 
Page 18 
 
 
in firms providing essential public services to the comm unity when their operations are impeded.  The 
only sectors that are reserved for the State are the exceptions stipulated in the Guatemalan 
Constitution and legislation, which impose restrictions  on foreign investment in the following sectors:  
transport, insurance and regulated professional services.4  The main guarantees and rights covered by 
the Foreign Investment Law are as follows:  guara ntee of private property, free trade, access to 
foreign exchange, security of investment, double taxation and dispute settlement.  Domestic and 
foreign investors alike must register at the one-stop window ( Ventanilla Ágil ) of the Ministry of the 
Economy.  Pursuant to the Foreign Investment Law, no review is needed to approve or accept foreign 
investments in Guatemala. 
23. Article 40 of the Constitution defines the legal framework governing expropriation and 
establishes that in specific cases, private property can be expropriated for reasons of duly proven 
collective utility, social benefit or public inter est.  Expropriation requires prior compensation, unless 
other terms are negotiated with the parties involved. 
24. Guatemala has a number of export promotion institutions in place, including the National 
Competitiveness Programme (PRONACOM) and the Investment Attraction Office ("Invest in 
Guatemala") which are mixed public-private forums .  "Invest in Guatemala" was set up in 1997 to 
promote investments in light industry, tourism, ca ll centres, the outsourcing of business processes, and 
agribusiness.5 
25. As of June 2008, Guatemala was a party to 18 bilateral investment treaties (BITs), involving 
19 trading partners.6  Of the 12 BITs negotiated since the last Review in 2002, seven had come into 
force by June 2008.  Responsibility for negotiating bilateral investment treaties rests with the 
Technical Inter-Institutional Investment Group, coordina ted by the Ministry of Foreign Affairs.  The 
National Commission for International Economic Negotiations (CONEI), which encompasses most 
institutions supervised by the Ministry of the Eco nomy, also participates in defining the goals to be 
pursued in trade negotiations. 
26. The provisions of the BITs and FTAs guarantee most-favoured-nation (MFN) treatment to 
foreign investors, who can avail themselves of the same incentives as those granted to Guatemalan 
companies (see Chapter III(4)(iii)). 
27. Some of the FTAs signed by Guatemala also include provisions to protect investors.  
Chapter 10 of DR-CAFTA, for example, provi des a mechanism for settling disputes between 
investors and the State, offering the possibility of  recourse to the International Centre for the 
Settlement of Investment Disputes (ICSID) or th e United Nations Commission on International Trade 
Law (UNCITRAL). 
                                                      
4 For example, Article 131 of the Constitution states that Government authorization is required to set up 
and operate any national or inte rnational transport service. 
5 Online information on "Invest in Guatemala".  Viewed at:  http ://www.investinguatemala.org/main. 
php?id_area=33. 
6 Guatemala has signed BITs with the following countri es (date of signing/date of entry into force, in 
parentheses):  Germany (17-10-2003/19-01-2005);  Argentina (21-04-1998/7-12-2002);  Austria (16-01-2006/-);  
Belgium and Luxembourg (14-04-2005/1-09-2007);  Chile (8-11-1996/13-10-2001);  Republic of Korea (01-08-2000/17-08-2002);  Cuba (20-08-1999/10-08-2002) ;  Czech Republic (08-07 -2003/29-04-2005);  Spain 
(09-12-2002/21-05-2004);  Finland (14-04-2005/06-01-2004);  France (27-05-1998/28-10-2001);  Israel 
(07-11-2006/-);  Italy (08-09-2003/03-03-2008);  Netherlands  (18-05-2001/01-09-2002);  Sweden (12-02-2004/01-07-2005);  Switzerland (09-09-2002/03-05-2005);  Chinese Taipei (02-11-1999/01-12-2001). Guatemala WT/TPR/S/210 
 Page 19 
 
 
28. Guatemala is also a member of the Multilatera l Investment Guarantee Agency (MIGA) and of 
ICSID.  Although Guatemala signed the Convention est ablishing the ICSID in 1995, this did not enter 
into force in the country until 20 February 2003.   The ICSID is the dispute settlement mechanism 
used by DR-CAFTA. 
29. Up to June 2008, only one case involving Guat emala had been initiated in the ICSID:  
Railroad Development Corporation v. Republic of  Guatemala (ICSID Case No. ARB/07/23).  This 
involves a complaint by a firm based in the United States that alleges indirect expropriation of assets 
owned by its local subsidiary ( Ferrovías de Guatemala ) in 2006.  The Guatemalan Government 
considers the complaint to be groundless. 
(4) INTERNATIONAL RELATIONS  
(i) World Trade Organization 
30. Guatemala is an active participant in the D oha Round, having made several submissions 
especially in conjunction with other members, focu sing essentially on the agriculture negotiations.  It 
is one of the countries that define themselves as sm all and vulnerable economies, and is a member of 
the Tropical Products Group.  Guatemala is also a member of the Cairns Group, the G-20 and the 
G-33 (also known as Amigos de los Productos Especiales  or "friends of special products".)  
Guatemala believes that its par ticipation in several groups gives it the chance to influence the 
proposals of each group and thus seek balances that reflect national interests.7  Guatemala is among 
the 14 countries that in 2002 recommended not taking action on issues relating to the extension of geographical indications for products  other than wine and spirits.
8 
31. Table AII.1 contains the list of notificati ons made by Guatemala to the WTO between 
January 2002 and March 2008.  Despite the numerous  notifications made in that period, several 
remained pending as at June 2008, including those relating to domestic support for agriculture, technical barriers to trade and customs valuation. 
32. Guatemala has acted as compla inant in the WTO dispute settle ment mechanism in two cases 
since 2002, and it has reserved third-party rights in six cases.
9  It was not involved as a defendant 
during the period 2002-2008.  The two cases in whic h Guatemala has been a complainant related to 
measures adopted by Mexico.  In 2003, it requested consultations with the Government of Mexico 
regarding the application of estimated prices, minimum prices, or minimum values for customs valuation.
10  In 2005, Guatemala notified the DSB that it had reached a mutually satisfactory solution 
on this issue.11  In 2005, it requested consultations over anti-dumping duties imposed by Mexico on 
certain types of steel pipes originating in Guatemala.12  The Panel Report, circulated in June 2007, 
                                                      
7 Mission of Guatemala to the WTO (2008), p. 7. 
8 WTO document IP/C/W/395  of 10 December 2002. 
9 European Communities, Conditions for the granting of tariff prefer ences to developing countries;  
(Complainant:  India);  European Communities, Protection of trademarks and geographical indications for 
agricultural products and foodstuffs (complainant:  Australia);  Dominican Republic, Measures affecting the 
importation and internal sale of cigarettes (complainant:  Honduras);  Mexico, Tax measures on soft drinks and 
other beverages (complainant: United States);  Brazil, Measures affecting imports of retreaded tyres (complainant:  European Communities);  and Colombia, In dicative prices and restrictions on ports of entry 
(complainant:  Panama).  WTO documents in the series DS246, DS290, DS302, DS308, DS332 and DS366. 
10 Mexico – Certain pricing measures for customs valuation and other purposes.  WTO document 
WT/DS298/1 of 25 July 2003. 
11 WTO document WT/DS298/2 of 1 September 2005. 
12 Mexico – Anti-dumping duties on steel pipes and tubes from Guatemala.  WTO document 
WT/DS331/1 of 23 June 2005. WT/TPR/S/210 Trade Policy Review 
Page 20 
 
 
found that several aspects of the Mexican measure were inconsiste nt with the provisions of the 
Anti-Dumping Agreement.13  In September 2007, Guatemala and Mexico notified the DSB of their 
agreement on a deadline for implementing DSB reco mmendations of six months from the date of 
adoption of the Panel Report;  and if possible, Mexico would try to implement the 
DSB recommendations within a shorter time period. 
(ii) Preferential agreements 
33. Most of Guatemala's trade involves partne rs with which Guatemala has preferential 
agreements in place.  It participates in a custom s union, and also in several FTAs and partial scope 
agreements.  In 2007, exports to countries with whic h Guatemala had preferential agreements in force 
accounted for 77.2 per cent of its total ex ports and 61.7 per cent of its imports.14 
34. The main characteristics of the customs union and FTAs that have entered into force are 
outlined in Table AII.2.  The Central American Common Market and the FTA between the Dominican Republic, Central America and the Unite d States are described below, these being the 
most important for Guatemala in terms of value of merchandise trade. 
(a) Central American Common Market (CACM) 
35. The Central American integration process is re cognized in Article 150 of the Constitution.  
Guatemala is a founding member of the Central American Common Market (CACM) established in 
1961, which also encompasses Costa Rica, El  Salvador, Honduras, and Nicaragua.  The 
Tegucigalpa Protocol to the Charter of the Organi zation of Central American States, which has been 
in force since June 1995, amended the regional le gal framework by creating the Central American 
Integration System as the institutional framework fo r Central American regional integration.  The 
Guatemala Protocol to the Genera l Treaty on Central American Econom ic Integration, signed in 1993, 
entered into force on 6 May 1996.  It defines the objectives, principles and measures to achieve 
economic union. 
36. The institutional structure of the CACM consis ts of the Council of Ministers of Economic 
Integration (COMIECO), the Executive Committe e for Economic Integration (CEIE), and the 
Secretariat for Central American Economic Integr ation (SIECA).  The Central American Bank for 
Economic Integration (CABEI) acts as a support agency.
15  The CACM has a number of regional 
regulations, including the Uniform Central Amer ican Customs Code (CAUCA), together with 
Central American regulations on rules of orig in, unfair trade practices, safeguard measures, 
standardization, and sanitary and phytosanitary measures.  The CACM has had its own dispute 
settlement mechanism since 2003. 
37. Changes to the Central American Tariff are made by COMIECO, pursuant to Article 38 of the 
Guatemala Protocol as amended on 27 February 2002.  Article 24 of the Tariff Agreement authorizes 
the State of Guatemala to implement COMIECO de cisions on tariff amendments through an executive 
agreement or decree.  In the case of Guatemala, decisions are published through a ministerial decision 
issued by the Ministry of the Economy. 
                                                      
13 WTO document WT/DS331/R of 8 June 2007. 
14 Calculations made by the WTO Secretariat, on th e basis of information from the Bank of Guatemala. 
15 CABEI, founded in 1960 by Costa Rica, El Sa lvador, Guatemala, Honduras and Nicaragua, is 
headquartered in Tegucigalpa and aims to promote the economic and social development of Central America.  
CABEI operates mainly through low-interest loans, and it generally finances infrastructure projects within the 
region. Guatemala WT/TPR/S/210 
 Page 21 
 
 
38. The vast majority of intra-CACM trade satisfying regional rules of origin receives duty-free 
treatment in Guatemala and other member countries.   The authorities have stated that the common 
external tariff was 95.7 per cent harmonized in Apr il 2008.  To achieve this level of harmonization, 
COMIECO has adopted 77 resolutions between 2001 and 2008, implementing an equal number of 
tariff amendments.  In addition, the tariff schedul e has also incorporated the third and fourth 
amendments to the Harmonized System.  The lis t of products excluded from regional free trade has 
been steadily reduced.  Several ex clusions were made during the pe riod under review, with the result 
that, at June 2008, Guatemala maintained exceptions  to regional free trade for only unroasted coffee 
and sugar. 
39. The Framework Agreement Establishing the Ce ntral American Customs Union was signed on 
12 December 2007.  The Agreement, which will be submitted to the legislative assemblies of the 
individual countries for review and ratification, e nvisages three stages in the customs union process:  
(1) institutional strengthening;  (2) trade f acilitation;  and (3) regulatory convergence. 
40. In the CACM framework, Guatemala has acted as  complainant once during the review period, 
in a dispute with Costa Rica concerning imports of ice cream prepared using imported milk.  The 
arbitral panel issued its final ruling in June 2006. 
(b) Free Trade Agreement between the Dominican Republic, Central America and the 
United States of America (DR-CAFTA) 
41. In January 2003, Guatemala and its four CACM  partners embarked up on formal negotiations 
for an FTA with the United States, which were  completed on 17 December 2003.  DR-CAFTA was 
signed on 5 August 2004 by Guatemala and the othe r four CACM countries, the Dominican Republic 
and the United States, and entered into force in Guatemala on 1 July 2006.  Guatemala has notified 
the treaty to the WTO.16 
42. While the vast majority of the mutual  commitments assumed by the parties under 
DR-CAFTA are identical for all, certain obligati ons, such as tariff quotas, are applied bilaterally 
between the United States and each of the Centra l American countries or the Dominican Republic. 
43. Through Decree No. 11-2006 of 18 May 2006, Guatemala passed the legal reforms needed to 
comply with the provisions of DR-CAFTA.  These included changes to the Government Procurement 
Law, the Commercial Code, the General Telecommuni cations Law, the Industrial Property Law, the 
Law on Copyright and Related Rights, the Penal Code, the Law on Arbitration, and the Executive 
Branch Organic Law ( Ley del Organismo Ejecutivo ).17 
44. Guatemala granted concessions to the Unite d States under DR-CAFTA across its tariff 
universe, with most industrial products and c onsumer goods becoming tariff free when DR-CAFTA 
entered into force.  Tariffs on othe r products will be eliminated over pe riods of five to ten years, while 
agricultural products enjoy longer tariff reduc tion periods ranging from 15 to 20 years.  For 
Guatemala, these periods are ten years in the case of beef and yellow maize (corn), 15 years for pig 
meat, beans and potatoes, 18 years for poultry legs and rice, and 20 years for dairy products.  Tariff 
quotas were set for the transition periods in the case of 40 agricultural products (see Chapter IV(2)). 
45. A World Bank study predicts that the products  likely to experience the largest increase in 
exports to the United States under DR-CAFTA are man-made filaments (34.4 per cent), 
footwear (42.0 per cent), tobacco (57.1 per cent), and knitted fabrics and garments (58.4 per cent).  
                                                      
16 WTO documents WT/REG211/N/3 and S/C/N/372, both of 17 August 2006. 
17 See also Ministry of the Economy (2005a). WT/TPR/S/210 Trade Policy Review 
Page 22 
 
 
The study also shows that the agreement could help reduce poverty in Guatemala.18  Although the 
results for DR-CAFTA as of mid-2008 are highly preliminary, the authorities have reported that, 
following a growth period in the first five months of  2007, exports to the Un ited States then stalled 
and declined slightly in the rest of the year. 
(c) Other agreements and arrangements 
46. Guatemala also has the following agreements in force:  Free-trade agreements (FTAs):  the 
FTA signed by Guatemala, El Salvador and Hondu ras (Northern Triangle) with Mexico;  the FTA 
with the Dominican Republic;  and the FTA with th e Separate Customs Terr itory of Taiwan, Penghu, 
Kinmen and Matsu (Table AII.2).  The Mexico-Northern Triangle Agreement stipulates that the 
provisions of the FTA shall prevail in the cases of incompatibility with other international treaties, 
including the WTO Agreement. 
47. Guatemala has concluded several agreements  under the Latin American Integration 
Association (LAIA), including partial scope  agreements signed with Panama (1974), 
Colombia (1984), Venezuela (1985 and 1992) and Cuba (1999).19  Guatemala also participates in 
LAIA's Framework Agreement between MERCOSUR and the CACM, which was concluded in 1998;  
this agreement aims to foster trade, investment, and technology transfer but does not include tariff 
preferences. 
48. Guatemala enjoys tariff preferences grante d unilaterally by Australia, Canada, Japan, 
Norway, New Zealand, Russia and the European  Union under the Generalized System of 
Preferences (GSP).  It  does not participate in  the Global System of Trade Preferences among 
Developing Countries. 
49. Guatemala is a member of the International Co ffee Agreement and, in a provisional manner, 
the International Sugar Agreement. 
(d) Agreements awaiting approv al or under negotiation 
50. As of September 2008, Guatemala had also c oncluded three FTAs which had not yet entered 
into force:  with Panama (together with the rest of Central America);  with  Colombia (in conjunction 
with El Salvador and Honduras);  and with Chile (a long with the rest of Central America).  Once 
ratified, the agreements with Panama and Colomb ia will represent an improvement on the partial 
scope agreements already existing between Guatem ala and those countries.  As of September 2008, 
Guatemala had also concluded a bilateral partial scope agreement with Belize;  and the FTA with 
Panama was awaiting approval by the Congress of th e Republic, as also was the FTA with Colombia.  
The FTA with Chile was with the Ministry of  Foreign Affairs pending approval from the public 
entities involved in the agreement, for subsequent  submission to the General Secretariat of the 
Presidency, which will forward it to Congress. 
51. In conjunction with the other CACM members, Guatemala is negotiating an association 
agreement between the CACM and the European Un ion, which aims to improve political dialogue 
between the regions, intensify coopera tion in several fields, and facilitate trade and investment flows.  
                                                      
18 World Bank (2005). 
19 For further information on the Association and related agreements see the LAIA Internet site:  
http://www.aladi.org/.and that of the Sistema de Información sobre Comercio Exterior :  http://www.sice.oas. 
org/TPD/CACM_PAN/CACM_PAN_s.ASP. Guatemala WT/TPR/S/210 
 Page 23 
 
 
Two further rounds of negotiations had been held by September 2008.20  The negotiations cover 
aspects relating to trade in goods, trade in services and company formation, government procurement, 
intellectual property, competition, trade and sust ainable development, and dispute settlement and 
institutional aspects.  If possible it is hoped to c onclude the negotiations by mid-2009.  The CACM is 
also negotiating free-trade agreements with Canada  and with CARICOM.  In conjunction with the 
other CACM members, Guatemala is working to standardize the various FTAs, signed or to be 
signed, particularly in relation to rules of origin. 
(5) AID FOR TRADE AND TECHNICAL ASSISTANCE  
52. In the previous Review of Guatemala, the WT O Secretariat drew attention to the country's 
potential institutional shortcomings for participati ng effectively in simultaneous initiatives in various 
forums.21  The aforementioned National Action Plan:  St rategy for Strengthening and Creating Trade 
Capacities (2007) acknowledges some of these shortc omings, and sets out a number of measures to be 
adopted to correct the problems.  The authoriti es see cooperation from donor agencies as playing a 
key role in helping Guatemala ach ieve these aims.  An important step taken to address institutional 
difficulties relating to the implementation and admi nistration of tariff reduction programmes and rules 
of origin, identified in the previous Review, was th e creation of the Directorate for the Administration 
of Foreign Trade in the Ministry of the Economy (Section 2(ii)). 
53. During the period under review, Guatemala has re ceived technical assistance from several 
organizations and countries, involving a total of 173 projects and events for assistance in implementing trade policies and regulations, valued  at US$23.9 million, and a further 140 projects on 
trade development worth US$36 million (Table II.1).  The largest project was " Fortalecimiento de la 
Posición de Guatemala en los Mercados Internacionales " – FOGUAMI (Strengthening of 
Guatemala's Position on International Markets), which received US$12.5 million in funding from the 
European Union.  The United States was the c ountry's second largest sponsor, with 43 programmes 
worth US$6.6 million.  The aim of FOGUAMI is to contribute to equitable and sustainable growth of the economy and employment, by strengthening forei gn trade with regional and European markets, 
promoting foreign investment, and increasing compet ition and competitiveness.  Project execution is 
expected to span November 2006-November 2010. 
54. On 18 April 2007 in Guatemala City, as part of the negotiations for an Association 
Agreement with Central America, the European Union presented a new aid programme for the region covering the period 2007-2013, based on a strategy to support the political and social priorities of 
each of the countries of the region.  The proposed aid amounts to €135 million in the case of 
Guatemala, with a strategy in which economic grow th and trade are the main areas of cooperation. 
55. Apart from the projects mentioned above, Guat emala has also benefited from technical 
assistance initiatives from other agencies and count ries, such as the United States Agency for 
International Development (USAID), the Canadian  International Development Agency (CIDA), the 
World Bank, the Inter-American Development Bank (IDB);  the United Nations Development 
Programme (UNDP);  the Agency for International Trade Information and Cooperation (AITIC);  the 
Organization of American States (OAS);  the United Nations Food and Agriculture 
Organization (FAO);  and the World Intellectual Property Organization (WIPO). 
56. During the period 2002 – June 2008 Guatemala benefited from 119 WTO technical 
cooperation and training activities, including particip ation in trade policy courses at regional level and 
                                                     
 
20 Up-to-date information on the negotiation rounds can be viewed at  http://www.aacue.go.cr/ 
ultima.htm. 
21 WTO document WT/TPR/S/94 of 14 December 2001. WT/TPR/S/210 Trade Policy Review 
Page 24 
 
 
in Geneva, as well as seminars and workshops on gene ral and specific aspects of international trade.  
In 2007, Guatemala responded to the questionnaire on technical assistance distributed by the WTO Committee on Sanitary and Phytosanitary Measures.
22  In that document, it argued that assistance and 
cooperation should preferably be aimed at tr aining human resources and the development of 
infrastructure needed to adopt sanitary and phyt osanitary measures, such  as modern agricultural 
protection systems, food security systems, electronic epidemiological surveillance systems and laboratory diagnostic facilities. 
Table II.1 
Trade-related capacity-building projects in Guatemala, 2002-2007 
Category Donor Projects Amount 
(US$ thousand) 
I. Trade policies and regulation  173 23,900 
Poverty reduction strategy Commission of the European Communities, United States, 
Inter-American Development Bank (IDB) 4 12,540 
Trade facilitation Canada, United States , World Customs Organization 10 2,532 
Trade and the environment United States 10 2,093 
Technical barriers to trade Spain, Sweden, United States, UNIDO 4 1,929 
Sanitary and phytosanitary measures Canada, Spain, United States 9 1,774 
Regional trade agreements Cana da, United States, IDB 10 1,024 
Trade and competition United States 4 546 
Trade-related capacity building Korea, United States, WTO 102 461 
Tariff reforms International Monetary Fund 2 445 
Trade and investment Japan, Korea, UNIDO 3 342 
Customs valuation Canada, United States 4 76 
Intellectual property Spain, United States, IDB 4 59 
Services United States 1 27 
Dispute settlement Korea, United States 3 17 
Rules United States 2 4 
Tariff negotiations – access to 
non-agricultural markets United States 1 2 
II.  Trade promotion  140 36,015 
Market analysis and development Germany,  Austria, Belgium, Canada, European 
Commission, United States, Norway, IDB 40 15,234 
Formulation and implementation of 
trade promotion strategy Belgian, Korea, Spain, United States, Netherlands, IDB, 
International Trade Centre 39 7,671 
Business support and other services Belgium, Korea, Spain, United States, Japan, Norway, 
Switzerland, European Commission, World Bank, IDB 61 13,110 
Source : Calculated on the basis of WTO data at:  http://tcbdb.wto.org/ben_country.aspx?entityID=125. 
57. In its 2001 Review, Guatemala acknowledged a number of shortcomings in its statistics 
system.23  In 2005, in the framework of the National Strategy for Statistical Development (ENDE), 
supported by the World Bank, the National Institute of Statistics (INE) pla nned the development and 
formation of the National Statistical System (SEN).   To make the system operational, it was decided 
to set up Sector-Level Statistics Coordination Offices (OCSEs)24, of which the following are now in 
place:  the Health Sector Statistics Coordination Office (OCSE/SALUD);  the Environmental Sector 
Statistics Coordination Office (OCSE/Ambiente);  and the Tourism Sector Statistics Coordination 
Office (OCSE/Turismo). 
                                                      
22 WTO document G/SPS/GEN/295/Add.22/Rev.1 of 4 July 2007. 
23 WTO document WT/TPR/M94 of 27 February 2002. 
24 Bank of Guat emala (2007a).